Posted
by
BeauHDon Thursday May 10, 2018 @09:00AM
from the cease-and-desist dept.

An anonymous reader quotes a report from TechCrunch: ZTE wasn't kidding around when it suggested that a U.S. Department of Commerce order would "severely impact" its survival. It's hard to image a successful path around the seven-year ban on the sale of U.S. products to the company imposed after it reportedly failed to sufficiently reprimand staff for flouting Iranian sanctions. Earlier today, in fact, the Chinese smartphone/telecom manufacturer announced that it had ceased its main business operations as it attempts to figure out the best way forward. "As a result of the Denial Order, the major operating activities of the company have ceased," the company wrote in an exchange filing spotted by Reuters. "As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations."

ZTE is a publicly traded company, and a massive one at that. What you're proposing is that every single ZTE shareholder would have to somehow invest in this new company, every single employee would have to resign from the original and join the new, and every single asset would have to be transferred to the new company tax free.

Or they could make it even more complicated by picking the people who would be in ZTE2. And selling the company's assets and hoping enough shareholders would be interested in the s

ZTE is a publicly traded company, and a massive one at that. What you're proposing is that every single ZTE shareholder would have to somehow invest in this new company, every single employee would have to resign from the original and join the new, and every single asset would have to be transferred to the new company tax free.

No, most shareholders are irrelevant. However the new company will have the same major shareholders (founders, early investors, communist party officials, etc... the pre-public and government folks) and possibly the same executives. As for assets they will get the good valuable and important stuff and the old shareholders will get to keep the legacy and unimportant stuff, and the mistakes.

I've seen this in the US. A company goes bankrupt. The previous owners/management contact the company that was suppo

There are a few other similar mechanisms that would make that process feasible, like founding a new company, which then merges with all of ZTE with an appropriate contract to keep everything intact. It'd have to be executed carefully to maintain viability while avoiding the ban, but such things have worked before.

Either way, you are absolutely correct that this is an investment nightmare. Even if a ZTE holding isn't already considered practically worthless, there can't be much confidence left in the current

That is, indeed, a most likely response. Also companies will start to be reluctant to invest in the US market. The import companies should do well out of that. The advertising companies less well.

This is basically a strong vote for isolationism, in a time when the cost of crossing the oceans has significantly declined. So the costs of this action will be significant, both in terms of fostering the growth of foreign companies, and in the cost of trade groups excluding the US from consideration.

ZTE looks like a huge company with operations all over the world. According to Wikipedia, cell phones only account for roughly 29% of their operations. So being shut out of one market (albeit a major one) in one sector of their business is enough to knock out the entire company? Something doesn't smell right.

The electronics supply chain is full of American parts and IP. You could probably build a competitive electronic doodad without any American content, but you'd need to do that from the get-go and until recently they had no reason to do this. It will take many months or years to put out new versions of their products - and in the meantime, they have no suppliers to keep manufacturing going.

The fact that any company sold anything to Iran at all under sanctions was basically a "let's see you stop me" move, and they got rightly called on that.

True they didn't have the sophistication to create a cutout company. A Czech company created a non-EU cutout company to sell goods to, who would in turn sell goods to Iran. Different ownership, a friend of a friend owned the cutout. The Czech company got its extra sales at a good price, the cutout got a good markup and basically reshipped unopened boxes. The Iranian buyers paid noticeably more for the goods but it understood the complications and workaround.

Now this was possible since the goods were consumer luxury items. Not tightly controlled and tracked military grade type stuff. YMMV depending on the goods.

As you indicated, bans only increase cost of supply, it doesn't actually stop anything. With enough demand, the supplies will still flow, and with enough middlemen become "legal". It is basically the same concept as laundering money, only with goods.

It only works if the demand is high enough to overcome the increase costs of bypassing the ban. In this case, a highly competitive market of Cell phones, it probably wouldn't.

What this will do is motivate Chinese companies to accelerate their shift away from the use of any kind of American IP, services, or subsystems.

In the end, all Chinese tech companies are going to have a fully Chinese-sourced technology "stack" for all of their products, so that they can sell to whomever they please without worrying about the US government.

In the end, all Chinese tech companies are going to have a fully Chinese-sourced technology "stack" for all of their products, so that they can sell to whomever they please without worrying about the US government.

Maybe. People always talk like this stuff is cost free. It's not an inevitable conclusion.

In the end, all Chinese tech companies are going to have a fully Chinese-sourced technology "stack" for all of their products, so that they can sell to whomever they please without worrying about the US government.

Maybe. People always talk like this stuff is cost free. It's not an inevitable conclusion.

It would've happened anyway eventually as that is openly China's strategy (see e.g. the "Made in China 2025" plan). Stuff like this just accelerates those plans.

China never wanted to perpetually be a source of cheap labour for Western companies. From the get-go, the idea was to eventually be able to make everything independently, and to use Western outsourcing to learn.

Yup, Pooh Bear has come out and said China should accelerate its development of its own chips etc. Went on about the 'two bombs and one satellite' as a reference to the Cultural Revolution etc.Hopefully there will be less starvation this time round.

A LOT of the IP for cell phone technology is covered by loads of patents in the US (and most anywhere else a Japanese, Korean or European cell phone company sells phones, which is pretty much everywhere) Good luck building anything that connects to a 4G network without running through a gauntlet of patent infringement claims.

By sheer numbers, LG and Qualcomm own half of the 4G encumbering patents. Nokia is the only European company that holds a significant number, which is about on par with a small US company called InterDigital that exists basically to license cell phone patents.

I'm not sure why you think ZTE's cellphone business is the only part that was sanctioned. There's nothing in TFS that says this, and this isn't about patents or some other narrow issue where only certain products from a company would be affected. Why would a government issue a ban on just part of a company's business for violating sanctions?

They are banned from any transaction direct or indirect involving technology and software (and commodities - no idea how broad that is) that ever touched the US. There's an awful lot of US companies with IP rights on technology and software (even if they are manufactured in China).

They could try and work around things, but that will increase costs and thus reduce their competitiveness. And the US is likely to put pressure on friendly governments to

The microphone on mine is ok. Do you have it in a case? The first case I bought had a tiny hole in the rubber for the mic that shrouded it in 4-5 mm of rubber. Enlarging that pocket and thinning down the rubber around it helped tremendously.

Fuck them.
Assholes circumventing the sanctions were fucking with the US bull.
With US bulls you do not just get the horn, you get it repeatedly shoved up your ass till you are dead, then 6 more times just for shits and giggles.

> there is nothing unfortunate about ZTE getting punished for supporting bad behavior of 2-bit despots in other countries.

Have you looked at the history of Iran and why their leaders hate the US? Our history books like to leave out some inconvenient parts of this story.

They have every reason to distrust us and every right to arm themselves. It's the only way to prevent my country from dropping so much freedom they end up in the stone age. If they ever doubt this path they can ask Syria and Iraq how di

Maybe your history books do but most history books I had growing up and that my kids have who are in school have no trouble criticizing the US in history. And I live in Texas

But regardless of history, I'm not sure how you think our policy should be different? Just let them do whatever they want and hope they never set their sites on us or our allies again? Because what you are writing pretty states that they have every reason to hate us so we would be fools not to be watching and trying to mitigate how m

Or you know, treat them like people and try to work out a better system.

Of course, as long as we treat Israel and Saudi Arabia's sovereignty as more important than America's, that will likely not be a plausible solution for decades or perhaps centuries. Need to get the religious bullshit out of power in all of those countries before they have any hope of cooperating with each other.

If MBS can hold on to his power and continues to be progressive (by Middle Eastern standards at least.. then there's some hope

I'm not sure how you think our policy should be different? Just let them do whatever they want and hope they never set their sites on us or our allies again? Because what you are writing pretty states that they have every reason to hate us so we would be fools not to be watching and trying to mitigate how much damage they can do.

For starters, stop making enemies when there is no reason to do so. The best example is the Iraq war of 2003, whose justification was based mostly on lies and propaganda. And the collateral damage among the population was probably worse than living under Saddam. The people of Iraq have a good reason now to hate the US.

Also, be a bit more careful in picking your allies. Just an example:Supporting the mujahideen in Afghanistan in the 1980s might have looked like a good idea back t

You're not wrong, and neither is he.
They do have every reason to distrust us... But they're also 2-bit despots, with a thin veneer of democracy pasted on top to keep a full-out revolt from making it through the grips of their religious police.

I hate my ZTE (Max XL). Yes, it has a huge screen - that was my motivating factor for buying it.

But it crashes about every two-three days, the touch screen is very flaky (completely unusable if it's charging), can't switch between two apps without it fulling killing one, and it can't even handle streaming media over bluetooth while google maps is open. $40 Kyoceras have better stability.

First time I heard someone say it was regarding Iran sanctions as opposed to xenophobia. Almost as if all the previous stories were #FakeNews.

I believe this was also one of the bullet points for Chinese trade sanctions; meaning, it's one of the half-dozen or so ways in which China cheats on their end of the trade agreement. They turn a blind eye to their companies that do this (and trade with North Korea).

Why should China's government penalize their companies who trade with Iran, which is a friendly nation and major trading partner? Or North Korea for that matter? Trading with your friends isn't a blind eye, it's two open eyes.

Do you think there's anywhere else in the world with existing facilities to build Apple's products at anywhere near the same cost or quality? There are a few places that have the technical ability, but they can't handle the scale of Apple's production.

Even if Apple wants to spend the piles of money needed to enter the fabrication, chemical processing, and manufacturing sectors, they don't have the experienced people on staff currently. They don't have the factories bu

That would be awesome for the long term and pretty yucky in the short term. Adversity and the grit to overcome is a great strength to have. Something we lost after the Korean and Vietnam wars. But with S. Korea and the rest of Asia making goods too, the US will do just fine. It's not like it's China or nothing. I think there are many countries willing to take the mantle of manufacturing ownership away from China and do business with the west.

Trade wars can definitely can make things rocky, and are not necessarily easy to win...

All China has to do in retaliation is ban manufacturing Apple/Google products in its country, and it would severely harm those companies in the US...

No, not really. There is a ready and willing talent pool here in the United States to manufacture electronics. There may be some short term pain but I don't really care if Apple only makes 7 billion instead of 8 billion or whatever the figure really is. If you call that severe harm, you're smoking what the corporate shills are selling you.

Trade wars can definitely can make things rocky, and are not necessarily easy to win...

All China has to do in retaliation is ban manufacturing Apple/Google products in its country, and it would severely harm those companies in the US...

So we're supposed to let China get away with rampant piracy and openly flouting of international sanctions against rogue states like Iran and North Korea simply because we're afraid of what China might do?

No one said "do nothing". People just stated that a trade war is a pretty stupid policy. People realized 100 years ago that hurts both sides.

There's also a difference between short-term victories and long-term victories. Take Iraq for example. In the short-term, that looked a pretty sweet outcome. Saddam deposed in mere days, etc. Here we are over a decade later and still fighting the outcome. We may close ZTE down today, but if a dozen small American companies go under because they can't sell their

About a year and a half ago I got each of my kids a ZTE ZMax Pro. I went with these phones because they were both affordable and full-featured.

They were $179 (unsubsidized). Specs were not quite on par with my LG V20, but they were decent.- 1080p resolution- 32GB storage, 2GB memory- Decent cameras- Only USB 2.0, but Type-C plug. (I got so tired of needing new micro-USB cables every other month for my kids)- MicroSD slot (hate that so many phones have dumped this in an attempt to force users to utilize cloud storage to increase telecoms data usage profits, I expect since T-Mobile forced everyone into an "unlimited data" war that we will see the slots return as standard on Android phones.)

Google shows the user rating for the ZTE Zmax Pro as 4.3, which is pretty decent for a no-name budget phone. And to be honest, I've had less problems with my kids ZTE ZMax Pros than I did with either my Samsung Note 2/S5 Active.

China wanted to buy Qualcomm as they realized they had a dependency on Qualcomm chips but US did not allow it. Now they will try other tacks, maybe offer Qualcomm engineers huge salaries to come to China and build a competing chip. The US is like a 3rd world country now where politics drive trade decisions rather than rules.

Dl you trust the economic reports? From what I can tell by looking around me, the economy sucks. The problem is that official statistics ignore people who are not actively looking for jobs, they also don't count under-employment (ie, used to make $100K/yr but now working minimum wage at Burger King). I see more homeless people around than I have ever seen before, many sleeping in their cars or campers, and encampments showing up beneat overpasses and in residential areas. People are nervous about keepin

The US is like a 3rd world country now where politics drive trade decisions rather than rules.

I'm a little confused. Keeping important industries in the US (not allowing foreign ownership) is a rule (and so is allowing Budweiser to be bought). It's also what every other country (inc. China) does.

No, it won't. The Chinese play by their own set of economic rules. They're being cut off for some legitimate reasons, like not abiding by embargo terms. It won't effect foreign corporations' willingness to do business.

Yup. This will definitely impact sales of American parts. If this ban holds, the Chinese will work to find other suppliers outside the US, made by non-US workers and with non-US IP (if available). They will probably have to develop indigenous industries to replace the ones they are now locked out of. It will depress trade. It might increase our trade deficit or possibly increase the prices that US consumers pay for phones. It will shift even more manufacturing jobs out of the US and generally make life wors

Most of the tech press is centered around the smartphone business (TFA is one of the few I've seen which does not make much emphasis on Smartphones, but does not tell the whole story), and the lack of Qualcomm Chips and Google services on the phones, but the problems run much deeper.

The bulk of ZTE's money do not come from the terminal business (Smartphones + CPEs [think ADSL/GPON modems and Wifi]). No, the bulk of ZTE's money comes from telco network gear, and there the sanctions already got their effect.

ZTE uses Acacia's chips for their optical (think fiber optics) equipment, and Acacia's shares are way down as a result.

You need Broadcom chips for the CPEs, MIPS and Brocade chips for the telco routers, PowerPC chips for the telephony switches, Altera's FPGAs for a myriad of specialized functions. and the list goes on and on...

You need certain OSs for your BSS/OSS systems. Things Like RedHat and Suse (yes, Linux is FOSS, but in order to play nice with the telcos, you need the certified Cosher/Halal versions).

While on the subjetc, while the guys of OpenSS7 have done a huge aamount of work, the SS7 solutions available and viable on linux are all the commercial variety (or you have to go to the ussual suspects), and all based in the USoA. Same for the X.700 implementations (SNMP's mucular, smart, badass, MMA older brother) in Linux and other OSs (HP-UX, AIX and Solaris).

Your boards run all sorts of RTOSs, for instance, wind-river...

Your IPTV gear needs all sorts of Processors and SW subjected to the embargo...

As a result of the ban, all these technologies are off-limits to ZTE now.

So no, this is not about "Qualcomm chips and Google's OS for Smartphones". If it were only that, the company would continue operating, and in less than 18 months, you would have a "Mediatek + AOSP based" Smartphone from ZTE taking over a decent chunk of market...

Nice that we have cut them off, BUT, China will retaliate SOON about that. Keep in mind that ZTE was controlled by the CHinese communist party, which is why they were giving out information to other nations.
Chances are good that China will stop rare earth minerals again, BEFORE Japan has started their mining operations. America really needs to remove all critical dependencies from our economy. It is one thing to depend on an alley, but another to depend on somebody like CHina.

Regardless of whether the US has the moral high ground, it also behooves companies in other countries, especially China, to likewise remove all critical dependencies on the US from their economy. It goes both ways.

A fully independent China is far more frightening to American interests than anything we have now, trade and IP issues notwithstanding. I think this move is going to backfire on the US in the long run. China is nearly 20% of the world's population! If we think we can ultimately control them wi

You didn't say it was theoretically possible based on 3-4km. When someone mentioned Japan would need a 5 year feasibility study, you said it was 'already done regularly' at 5km despite the article itself mentioning the study...

Why not link to even 1?

Link to even 3-4km if that is the best you can do...
Otherwise it's just more baseless claims from you.

Access to a market is never unfettered. For better or worse, we trade some governmental control of access to the market for various benefits (quality control, protection for domestic competition, etc.), so market regulators are thus granted the right to set conditions for market entry.

In this case, we demand that participants not trade with our enemies. ZTE violated that rule. We imposed a limited regime of punishments--a corporate fine and a request that the responsible corporate officers be punished--that